On Friday, Pfizer Inc agreed to settle the class-action lawsuit brought by former Wyeth Inc shareholders. The lawsuit had alleged alleged that Wyeth had misled investors about the risks associated with the antidepressant Prisitq. In 2007, after the U.S. Food and Drug Administration declined to approve Pristiq for the treatment of “hot flashes” in post-menopausal women citing doubts about heart and liver problems associated with the drug, Wyeth shares lost more than $7.6 billion in market value.
Shareholders alleged that Wyeth’s failure to disclose adverse effects in a timely fashion had led to its stock price to be inflated during June 2006 to July 27 time period. Wyeth was bought by Pfizer in 2009 and shareholders of Wyeth led by the Pipefitters Union Local 537 Pension Fund stepped up their lawsuit.
Defendants included former CEO Robert Essner and other former Wyeth officials. Pfizer, which had generated about $461 million in sales of Pristiq from January to September decided to settle without admitting any wrongdoing on part of the defendants. The proposed $67.5 million settlement still requires the approval of U.S. District Judge Richard Sullivan before it becomes effective. Sullivan had certified the matter for class action in September.
Pfizer has already agreed to pay about $164 million in a similar lawsuit about one month back. That lawsuit accused Pfizer of misleading investors about the arthritis drug Celebrex.
The case is City of Livonia Employees’ Retirement System v. Wyeth et al, U.S. District Court, Southern District of New York, No. 07-10329.